The goal of "Nonprofit Conversation" is to provide a forum for discussion of nonprofit success and challenges. Bunnie Riedel (host) provides advice, observations and solutions for the nonprofit community. Guest bloggers will be invited to share their ideas and interviews will be conducted with nonprofit executives, board members and other experts in an effort to create a "conversation."

Wednesday, April 29, 2009

There’s a great deal of organizational introspection going on right now. Yesterday, I had that conversation with a nonprofit executive who discussed the drop in revenue due to the economy. How many of those conversations have I had in the last few months?

While many organizations are examining their revenues, staffing and how the organization could run better, it might also be a good time to examine the Bylaws. Are your organization’s Bylaws good enough to really serve the organization? Or are you creating a new organization and you’re wondering what needs to be in the Bylaws?

I’ve created a sample checklist of components of Bylaws, things to consider when forming a new nonprofit or evaluating an existing one.

Size of Board

The size of your Board requires a great deal of consideration. Make it too large and nothing gets done, make it too small and you don’t have enough board members to get anything done. I know of a national organization that has 65 Board members! The largest for profit board of a Fortune 500 company has 33 Board members, so why would a nonprofit even think it needed 65 Board members?

My preference is somewhere between 9 to 11 Board members. Large enough to take on projects and small enough not to become unwieldy. Remember if you really feel you need more hands you can form committees of members, you don’t have to have Board members as sole staff of working committees.Requirements of Board Members

Clearly state in your Bylaws what the requirements are for being a Board member. Is there an organizational membership requirement? Is there a residency requirement? Is there a professional requirement (must be practicing a certain trade or profession)? Is there an age requirement (must be at least 18 years old)?

What disqualifies someone from being on the Board? I had a nonprofit Board applicant send me his application. I called to tell him there was a residency requirement; that he had to live inside the city. The next day he re-sent his application with an in-city address and said that he had moved into the city in the last 24 hours. Mmmm.

Are there special requirements for recruiting Board members? Do you want to enshrine in your Bylaws certain types of people? For instance, do you want to designate certain seats for someone from the religious community, the legal community, the educational community, etc.? These “special talent” seats may help your organization ensure diversity in Board membership and ensure you have a variety of talent around the table.

How are Board members seated? Is it by majority vote or is it by two-thirds of the vote? What will be the Board members’ terms of service? Are the seats for two years with renewal up to a six year maximum? And do include term limits, there is nothing worse than perpetual Board members, like bread, they do go stale.

How will you remove “bad” or unethical Board members from the Board? What is the procedure? One of my favorite Bylaws is automatic removal if someone has missed two meetings in a row and requiring the absent Board member to be affirmatively voted back on the Board.

How are vacancies filled? How are meetings conducted? What is the process for calling an Executive Session and what kinds of things can be discussed during Executive Session? Typically, because of open meeting or “sunshine” laws in various states, Executive Sessions really can only be called to discuss a personnel matter.

Is the Executive Director or Chief Officer an ex-officio member of the Board? Will there be any compensation to Board members, such as a stipend or the reimbursement of travel expenses?

Who Are the Officers?

Typically most organizations have a President (or Chair); Vice-President (or Vice Chair); Secretary and Treasurer. Officers beyond those are up to the organization and should be based on need. Sometimes expanding the Executive Committee can be helpful. Remember an Executive Committee can be empowered to make decisions between Board meetings, so the makeup of the Executive Committee is important. Perhaps the Membership Chair should be part of the Executive Committee or the legal appointee should sit on the committee.

How are these Officers elected and how long is their term? How are they removed from office without removing them from the Board?

Is There a Membership Provision?

If you are starting or have a membership organization, what is your membership provision? What are the requirements for becoming a member and do you want a provision that revokes membership, and if so, what is the procedure for that? Do members have voting rights?How Do You Make Bylaws Changes?

You want to make sure you can change the Bylaws if necessary. However, you want to make it difficult enough that the Bylaws aren’t constantly changing to suit Board member whims, yet doable enough that they can be changed when needed. Is there a notification requirement? Is it 30 or 60 days? What is the notification requirement? Must it be in person at the Board meeting or should it be by certified mail? Who can propose a Bylaws change and how do they propose one? Does it require a majority or two-thirds vote of the membership?

Some states or countries require that certain things be included in Bylaws in order to get or maintain nonprofit status, check with your state or country for its requirements.

The primary function of Bylaws is to serve the organization. If your Bylaws are interfering with that goal, it might be time to examine them and make necessary changes.

5 comments:

I have a friend who was told that "Sunshine Laws" do not apply to Non Profit Organizations (NPOs), but only to Government entities. You referred to Sunshine Laws in a way that leads me to believe they apply to NPOs too.

where can I get a copy of bylaws mandated by law, we belong to a homeowners assoc. the officers are telling us that we have to change a lot of the bylaws as per state mandates. my e mail is bandbzig@citlink.net